Question

In: Economics

The property appraisal district for Marin County has just installed new software to track residential market...

The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the equivalent value (a) now and (b) for each year hereafter. The system has an installed cost of $2,500,000 and an additional cost of $700,000 at year 8. The annual software maintenance contract cost is $75,000 for the first 4 years, $100,000 for the second 4 years, $125,000 for the third 4 years, and $125,000 thereafter. In addition, there is expected to be a recurring major upgrade cost of $100,000 every 14 years. Assume that i= 7% per year for county funds.

Solutions

Expert Solution

Solution :-

Interest Rate Per Year = 7% per year

Interest Rate of 14 Years = ( 1 + 0.07 )14 - 1 = 1.5785 = 157.85%

Initial Cost = $2,500,000

Present Value of Additional Cost of $700,000 at Year 8 = $700,000 * P/F ( 7% , 8 )

= $700,000 * 0.5820

= $407,400

Now Present value of Annual Software maintenance

Present Value of $75,000 for next 4 Years = $75,000 * P/A ( 7% , 4 ) = $75,000 * 3.387 = $254,025

Present Value of $100,000 for next 4 years = $100,000 * P/A ( 7% , 4 ) * P/F ( 7% , 4 )

= $100,000 * 3.387 * 0.7629 = $258,394.23

Present Value of $125,000 for third 4 years = $125,000 * P/A ( 7% , 4 ) * P/F ( 7% , 8 )

= $125,000 * 3.387 * 0.5820 = $246,404.25

Present Value of Major Upgrade Cost = $100,000 / 157.85% = $63,349.91

( A )

Now Equivalent Value now = $2,500,000 + $407,400 + $254,025 + $258,394.23 + $246,404.25 + $63,349.91

= $3,729,573.39

(B)

Value for Each Year there after = $3,729,573.39 * 7% = $261,070.14

***Please please like this answer so that I can get a small benefit. Please support me. Thankyou***


Related Solutions

The property appraisal district for Marin County has just installed new software to track residential market...
The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the equivalent value (a) now and (b) for each year hereafter. The system has an installed cost of $2,500,000 and an additional...
The property appraisal district for Marin County has just installed new software to track residential market...
The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for theindefinite future, find the present worth  (or capitalized cost) of the system. The system has an installed cost of $225,793 and an additional cost of $54,878after 10...
The property appraisal district for Marin County has just installed new software to track residential market...
The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the present worth  (or capitalized cost) of the system. The system has an installed cost of $158,721 and an additional cost of $60,394after...
The property appraisal district for Marin County has just installed new software to track residential market...
The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the equivalent value (a) now and (b) for each year hereafter. The system has an installed cost of $174515 and an additional...
The property appraisal district for Marin County has just installed new software to track residential market...
The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the equivalent value now and for each year hereafter. The system has an installed cost of $204835 and an additional cost of...
The property appraisal district for Marin County has just installed new software to track residential market...
The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the equivalent value (a) now and (b) for each year hereafter. The system has an installed cost of $2,500,000 and an additional...
1. The property appraisal district for Marin County has just installed new software to track residential...
1. The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the equivalent value (a) now and (b) for each year hereafter. The system has an installed cost of $174515 and an...
Q.1. The property appraisal district for Marin County has just installed new software to track residential...
Q.1. The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the equivalent value (a) now and (b) for each year hereafter. The system has an installed cost of $170,087 and an...
Q.2 The property appraisal district for Marin County has just installed new software to track residential...
Q.2 The property appraisal district for Marin County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the equivalent value (a) now and (b) for each year hereafter. The system has an installed cost of $2,500,000 and an...
A city uses a Property Tax Collection Custodial Fund to account for the collection of property taxes for itself, a county, and a school district.
Part VII: Custodial FundsA city uses a Property Tax Collection Custodial Fund to account for the collection of property taxes for itself, a county, and a school district. Prepare journal entries to record the following transactions and events for city’s Custodial Fund during calendar year 2020.During 2020, property taxes were levied for the city ($6,000,000), the county ($3,000,000) and school district ($9,000,000). Assume taxes collected by the Custodial Fund for the city will be paid to the city’s General Fund.Property...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT